Columnists, Darren Satsky, Lumber Market Report, V3I1

2016 Lumber Market Review, Forecast


When it comes to the lumber market, many factors affect supply and prices. And that has a direct impact on shed builders.
For my first report of 2017, I can say that consumer confidence is up, but lumber prices are in flux. Read on for more details.

Economic Background

Good news! The Conference Board Consumer Confidence Index hit a 15-year high in December.

Five thousand households are surveyed about current business conditions, business conditions over the next six months, current employment conditions, employment conditions over next six months, and total family income over next six months. The results of the survey are closely monitored by businesses, banks, investors, and manufacturers for decision-making purposes.

2016 North American Lumber Markets

More lumber is available to the U.S. consumer than in previous years. Much of this can be attributed to gains in imported
lumber from Canada.

I’ve seen U.S. estimates of approximately 30 percent more lumber. Canada estimates this increase closer to 18 percent. There currently is an investigation
into the amounts.

All this is part of the trade case initiated by the United States. The higher number, if verified, will certainly help the case for anti-dumping taxes and
countervailing duties.

The increase in imports to the United States from Canada had been encouraged by the “standstill” or no tax period after the last trade agreement expired. All Canadian shipments of lumber in 2016 were duty free. Also helping the increase was slower overseas markets.

2016 Lumber Prices

Lumber prices increased about 12 percent over the period from the first quarter till the third quarter in 2016. Prices have been relatively flat since.

So, how do you explain more lumber supplied to the market along with higher lumber prices? Usually more supply means lower prices. What is keeping the price from falling? Is there extraordinary demand from the manufacturing sector to stimulate higher lumber prices?

The U.S. housing market starts don’t reflect it. In fact, starts maybe down from the same period last year. More likely the answer is the shift in demand
as a result of all the uncertainty around the trade deal.


There will be more uncertainty through the first few months of 2017. Prices will move around a lot and will be higher than if the market did not have the trade case hanging over its head. The rumor that high tariffs and anti-dumping penalties will be implemented keep the market from falling.

When a trade deal is struck or a preliminary finding made, mills and consumers will know more what the rules are ahead, and probably sell off. Until then, prices will be volatile.


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